Which statement is correct regarding dividend entitlement?
A)Cumulative preferred shares do not have any rights to missed dividend payments.
B)Non-cumulative preferred shares must be paid all missed dividend payments when dividends are declared.
C)A corporation need only pay dividends when it declares them to be payable.
D)A company can avoid paying dividends in arrears on cumulative preferred shares if it is to pay dividends on common shares.

Question

Quizplus · Accepted Answer

A corporation is only obligated to pay dividends when it officially declares them. Cumulative preferred shares do accrue unpaid dividends, which must be paid before common shares receive any dividends. Non-cumulative preferred shares do not have the right to missed dividends.

Which Statement Is Correct Regarding Dividend Entitlement